Freelancers who are really ‘workers’ can now claim holiday pay

A recent judgement on the employment
status of locum pharmacists could prove costly to pharmacy owners but a welcome
bonus for some freelancers.

GraceWooller went to Ashford Employment
Tribunal in December last year to successfully challenge her employment status
as a locum.

Her victory will enable her to claim unpaid
annual holiday pay (5.6 weeks in total) for each of the three years she had
worked for her previous employer, Paydens, a pharmacy chain.

Wooller’s lawyer Julie Calleux, from
employment law specialistsEmployease, argued that her client's contract did not reflect
her working conditions and that she was in fact a “worker” and not the
“independent contractor” that Paydens believed she was.

Or, “(b) any other contract . . . whereby the
individual undertakes to do or perform personally any work or services for
another party to the contract whose status is not by virtue of the contract
that of a client or customer of any profession or business undertaking carried
on by the individual.”

But here is the flaw in Paydens’ defence,
according to Calleux. She argued that the clause did not accurately
reflect the relationship between Paydens and Wooller.

Wooller said that on several occasions her offer
to provide a replacement pharmacist was turned down by Paydens, which
insisted on arranging its own cover.

In fact, Calleux argued it would be unreasonable
to expect them to do anything else, given the key role
of a pharmacist in any of their branches.

Right of substitution was a fiction

Paydens submitted
that they had no problem accepting substitutes if they had the required
qualification. But the tribunal accepted Calleux's argument that at this level
of responsibility, it did not make business sense for Paydens to
accept somebody they did not know.

The tribunal concluded: “The claimant was engaged to
provide services personally and was a worker. The purported right of
substitution was, in reality, a fiction. The respondent’s position in
respect of the claimant was clear: if she could not carry out the work they
wished on a particular date, they would provide an alternative - the claimant
was not free to do so.”

The fact that Wooller is now considered a
worker means she can pursue her claim for unauthorised deduction of
wages for holiday pay backdated from the start of her relationship
with Paydens.

Judgement highlights problem in
other sectors

According to Employease, this decision
could have a substantial impact on Paydens and the whole pharmacy sector;
it could set a precedent for any locum wishing to raise the issue.

The company owns some 95 pharmacies in South
East England and there are one or two people on that contract in each
outlet – multiplied out, it could be a large sum, although there are no
guarantees that Paydens or, indeed, other employers would have
to pay out the full sum, such is the complexity of employment law.

However, the contract that Wooller and her lawyer
successfully challenged was Paydens’ standard locum contract: Calleux
believes it to be fairly standard throughout the industry.

In fact, Employease says the judgement serves
as a reminder of what can happen in many other business sectors - any
employer who inserts a
substitution clause in a freelancer's contract but does not allow that
individual to provide their own substitute cover during absences risks facing
similar claims.

Final thoughts and recommendations

If a company employs people under a
“non-employed” status, Calleux recommends three alternative solutions for such end-users
to avoid facing unpaid holiday pay claims: